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DSD: Bathabile Dlamini: Address by Social Development Minister, on the occasion of the Inter-Ministerial Committee (IMC) on Comprehensive Social Security Tshedimosetso House (15/09/2017)

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DSD: Bathabile Dlamini: Address by Social Development Minister, on the occasion of the Inter-Ministerial Committee (IMC) on Comprehensive Social Security Tshedimosetso House (15/09/2017)

Social Development Minister Bathabile Dlamini

15th September 2017

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Minister of Postal and Telecommunications, Dr Siyabonga Cwele
Minister of Home Affairs, Prof Hlengiwe Mkhize
Members of the Technical Committee and senior officials here present
Ladies and Gentlemen of the media

Thank you for joining us this morning for the Inter-Ministerial Committee on Comprehensive Social Security media briefing, as we outline the progress made by the South African Social Security Agency (SASSA) towards the implementation of the Constitutional Court orders as directed on 17 March this year.

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In its judgment, the Constitutional Court ordered the Minister of Social Development and SASSA to submit quarterly reports highlighting the steps being taken to ensure the appointment of a new payment service provider when the current 12 months contract with CPS lapses at the end of this financial year.

Following the Concourt orders, Government has moved swiftly and with determination to ensure that these orders are implemented efficiently and diligently. Working together with the Portfolio Committee on Social Development, we have incorporated the Constitutional Court orders into the Annual Performance Plan of SASSA, starting in the current financial year and over the MTEF period.

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I will now outline some of the key steps we have taken in this regard.

On the 18 of March this year, President Jacob Zuma established the Inter-Ministerial Committee (IMC) on Comprehensive Social Security to provide impetus and political oversight to ensure full compliance with the Concourt orders.

Beyond the important directive from the Concourt, the IMC is also focusing on comprehensive social security reforms with a view to addressing the gaps and weaknesses identified in the current social security measures.

In its first quarter report to the Concourt deposed on 19 June this year, SASSA outlined a five-year change programme for the takeover of the function of payment of social grants. This is line with the envisaged role of the Agency as per the objective of the SASSA Act (Act No. 13 of 2004).

The Act clearly provides for the establishment of SASSA as an organ of state whose primary mandate is to ensure efficient and effective management, administration and payment of social grants in South Africa. This mandate was reaffirmed by the Concourt judgment that SASSA has a constitutional obligation to administer and PAY social grants.

In making this declaration, the Concourt was mindful of Section 27 of the Constitution of the Republic of South Africa (Act 108 of 1996) which provides that everyone has the right to have access to social security, including the right to social assistance, if they are unable to support themselves and their dependents.

The proposed five-year takeover period is based on extensive research into various payment options and recommendations of the Ministerial Advisory Committee and the work streams. SASSA has adopted these recommendations, with clear and specific deliverables during this transition period.

The in-sourcing and integration of the grants administration and payment value chain is an enormous task that requires time, high level specialised skills and resources that are currently not readily available.

The gradual phasing-in of these processes will therefore ensure a seamless transition.

As part of this interim arrangements and in line with the position of the governing party, SASSA began collaborating with the South African Post Office (SAPO) with the view to work together to ensure payment of social grants beyond March 2018.

Ladies and Gentlemen, let me once again take this opportunity to emphasise that Government through the work of the IMC remains committed to this collaboration.

We have demonstrated this commitment through a number of ways, which I will now outline.

In accordance with Instruction Note 3 of 2016/2017, the National Treasury granted SASSA a deviation from a competitive bidding process, subject to a number of conditions, including the submission of amended procurement plan and consideration of the financial proposal from SAPO through Bid Committees.

As per the recommendation of the IMC meeting held on 13 June 2017, SASSA issued the Request For Proposal to SAPO on 24 July 2017. The IMC also recommended that a comprehensive due diligence be undertaken on SAPO.

Ladies and Gentlemen, due diligence is nothing new, but a common business pre-requisite to inform decision making, particularly on an important matter such as the one we are discussing here today. It looks at a number of issues, including risks and opportunities, financial implications, legal implications, regulatory impacts and wider implications, to name but a few.

Due to the fact this is a highly technical and specialised field, SASSA issued a Request for Quotation (RFQ) to appoint a service provider for this purpose. This process did not yield the desired results. Using the National Treasury’s central supplier database, SASSA then issued the RFQ to a group of service providers.

All four service providers submitted their quotations late, resulting in further unavoidable delays in the finalisation of this process in terms of the procurement schedule. The process was re-run and the CSIR was subsequently appointed to conduct due diligence which commenced on 31 August and was completed on Thursday, 14 September 2017.

The Bid Evaluation Committee will consider the report on 20 September 2017.  We will announce the final decision before the end of next week.

Members of the media, following many years of outsourcing information technology and business processes to external suppliers, I now want to draw your attention to payment-related functions that SASSA has begun bringing in-house. What we have learnt over the years is that we need to regain or improve SASSA’s control over critical functions and strategic processes.

SASSA’s bank account

Under the current contract with CPS, the total amount for all social assistance transfers are deposited into a CPS bank account. This creates serious challenges as SASSA is unable to have direct oversight on this account. To address this, SASSA is in the process of re-activating its paymaster general account with the South African Reserve Bank. To this end, we are in consultation with the National Treasury.

On a related matter, plans are underway to open SASSA’s corporate account with special beneficiary disbursement accounts through a sponsor bank. The requirement for such an account is included in the Request For Proposal. This account will be solely managed by SASSA. These two accounts will be opened with the same bank to reduce costs and to improve the ability to transfer funds freely.

Both processes will be finalised by January 2018.

Insourcing the management of Regulation 26A  deductions

Plans are currently underway to manage this function internally with effect from next month. These are deductions relating to the payment of premiums for funeral insurance policies that beneficiaries take out on their own accord with insurance companies.

Performing this function internally as per the provision of the Social Assistance Act and its amended regulations will ensure proper management of this process. To this end, we have enhanced the SOCPEN system to enable it to process amongst others, dual payment file for insurance companies.

We have identified the need for staff training as a critical success factor, given the fact that SASSA will be in-sourcing some of these functions for the first time since its establishment eleven years ago.

Biometrics Identity & Access Management Project Status Report

With regard to biometric identity and access management, we are pleased to report this project commenced in July without any hurdles. It will be implemented over a three-year period. The main aim is to ensure the biometric enrolment of all system in order to improve fraud detection and to protect staff who process applications for social grants.

Direct transfers to beneficiaries with commercial bank accounts

Regulation 21 of the Social Assistance Act makes provision for cash payment or direct transfer into the commercial bank accounts of beneficiaries. By the end of this month, CPS will make available to SASSA, a full list of all beneficiaries whose grants are paid into their commercial bank accounts.

SASSA is currently in consultation with the National Treasury to re-establish the linkage to Bankserv to enable these payments. Once finalised, over 2 million beneficiaries will be paid using this method. This will reduce the number of beneficiaries who depend on other payment channels.

Contrary to media reports, SASSA has not received any document in respect of the research published by the Payments Association of South Africa (PASA). Our current data shows that approximately 45 percent of the 10, 7 million grant beneficiaries utilise the current service provider’s infrastructure.

The current service provider manages approximately ten thousand (10 000) SASSA points of service, utilising an offline payment solution which is critical to service delivery. This was brought about by the lack of Information Communication Technology (ICT)  infrastructure in the rural parts of our country. The EMV  solution deployed by banks require online capability and is therefore unsuitable for this payment channel. This might be the reason why the big banks did not respond to the RFP and the RFI that SASSA advertised.

The current payment solution makes provision for grant beneficiaries to inter-operate in the National Payment System (PIN verification) as well as using biometric verification for transacting in the current service provider’s infrastructure.  In this regard, we are uncertain as to the origin of the unsubstantiated claims that the banking infrastructure has the latest biometric technology in respect of banking transactions.
Ladies and Gentlemen, as we continue to focus on the road ahead, we are also turning our attention to the potential economic contribution we can make through this investment, particularly in driving local economic development. In the last financial year, the Department and its entities procured over three hundred million (300 000 000) rand worth of social relief of distress from co-ops and SMMEs.

The recent IMC meeting supported our plans to leverage social grants to promote local economic development. We will make further announcements on this matter in due course.

We want to assure all recipients of social grants that The Department of Social Development and SASSA are committed to paying the right social grant, to the right person, at the right time and place, NJALO!

I thank you.

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